An index of existing homes under contract in February increased less than 1% , essentially moving sideways from January, according to the National Association of Realtors.

The NAR's Pending Home Sales Index stood at 109.3, an increase of 0.7% from January's 108.5 but a decrease of 8.5% from February 2006, when it was 119.4. The index spiked at 113.3 in December, which was attributed to mild weather by the Realtor association.

David Lereah, NAR's chief economist, said, "If it wasn't for the unusually bad weather in February, we'd be seeing a better performance in pending home sales. We also may be seeing some fallout from a decline in subprime lending, but a slight improvement in the more volatile month-to-month index is encouraging; the data suggests an underlying stabilization is taking place in the housing market, but it will take another month or two to clarify. Problems in the subprime mortgage market will become more apparent over time, and they will modestly depress the overall level of improvement in existing-home sales we expect as the year progresses."

Regionally, pending sales were up 4.5% in the South to 121.9, 8.0% below a year ago, and up 2.9% from January to 103.0 in the Midwest, 9.7% lower than February 2006. The index in the Northeast fell 1.3% to 99.1 sequentially and 8.2% year-over-year, and in the West, it fell 6.0% from January to 104.1 and was 8.2 percent lower than February 2006.

The index is based on a large national sample based upon approximately 20% of all contracts signed on existing homes. It is based on an index of 100, representing the average level of contract activity during 2001, the first year to be examined. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons.